OlegTheBatty wrote:The economy is a dynamic system. Calculus allows dynamic modelling. Way back when, early economists did not have calculus, so modelling dynamism was beyond their ability. Rather than learn the math, they simplified the models to a static system, and the world has been stuck with static modelling ever since (although that is beginning to change).

My economics course's character was more geared towards law. We discussed financial modelling and a big problem was incorporating, what was then, innovate financial products, like trading discretionary trusts, futures options as hedging, option swaps and things like that. As you can imagine, it was not a matter of working out the maths as much as trying to work out what basic parameters you were trying to model.

These are financial instruments/processes. They are not economics any more than spending a dollar is. Likely was a lot more useful to you than straight economics would have been.

I would certainly agree that non economist have picked up on buzz phrases like "Laffer Curves" without understanding they need to be modelled first. It does appear to me that Trump's tax cuts and "trickle down effect" are something he just did, with no modelling first, at all. To me, that is negligence of a high order, but he was voted in....so be it.

Yeah, when you get to what is fed to the unwashed masses. It's no wonder that people like Bobbo throw up their hands in despair. The link between economic gobbledegook and power politics means vast quantities of often contradictory streams of unadulterated, unpasteurized BS.

. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

OlegTheBatty wrote:
Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.

I love David Friedman's powerful book, but think that it's a shame that he chose to use the term "capitalism" instead of free enterprise since "capitalism" has now become associated with crony capitalism and and socialism and bailouts for the rich, which are a far cry from free enterprise.

OlegTheBatty wrote: Yeah, when you get to what is fed to the unwashed masses. It's no wonder that people like Bobbo throw up their hands in despair. The link between economic gobbledegook and power politics means vast quantities of often contradictory streams of unadulterated, unpasteurized BS.

That pretty fair summary........although I do take a bath at least once a year. But "aside" from the truth in that, the point remains that too much of legitimate economics is also BS. Thats why no one gets rich predicting the future...and if a knowledge base is not predict actual outcomes.......then what does it really know?

There are some excellent really simple basics that economics has nailed down, but this distilled common sense is not really useable. I really like Marx and his recognition of the class warfare that necessarily exists between capital and labor. But the "experts" cant agree on whether or not immigration is good or bad for society........I do think immigration is good for capital.......but bad for labor. See Marx in action? Still can't address what is good or bad for "society." I often post: there is no such thing as "society." Only groups of people with similar interests within a society. All the individual interests actually don't aggregated to a single meaningful score. Its always just who benefits, and who gets hosed.

Real Name: bobbo the existential pragmatic evangelical anti-theist and Class Warrior.
Asking: What is the most good for the most people?
Sample Issue: Should the Feds provide all babies with free diapers?

Guest on Max Kieser on Russian TV just said that Thomas Friedman is famous for his comment that the Internet would prove to be no more impactful than the fax machine. He thought it was just a communication tool rather than a basic change in the way business and other affairs would be conducted. fair enough....to conclude that predicting the effect of the Internet of Things is not formally a subject of economic application, but fair as well to think it is. Show the limits of otherwise "great" minds........or in my view, the feet of clay our heros all have.

Was it Greenspan who after the crash of 2008 said he didn't think people would be so short sighted? Something rather silly like that.

And same Kieser show.....the impact of Bitcoin and other cryto-currencies and how its not understood by "economics" at all. Standard economics is based on diminishing returns affecting market issues, crypto-currencies and much of digital anything is based on increasing returns. Again...perhaps its not even a subject economics is supposed to address???

Then right after that on Watching the Hawks (today...you can still catch it) an expert guest reviewing the Trump impact on the Stock Market with the promise of reduced regulations and capital repatriation...yes, it drove the Market Up, but when 3 people in the USA have as much wealth as 60% of the wage slaves....does "standard economic theory" even apply when talking about "the Market?" That may be another way to phrase my main concern: theory is based on all the players being free to act. The truth is: 99% of people are not free to act at all. How valid can any theory be then?

Real Name: bobbo the existential pragmatic evangelical anti-theist and Class Warrior.
Asking: What is the most good for the most people?
Sample Issue: Should the Feds provide all babies with free diapers?

OlegTheBatty wrote:Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.

...To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.

To put this point less paradoxically, the relevant question to ask about the "assumptions" of a theory is not whether they are descriptively "realistic," for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions....

Or, to put it into my own words, "it doesn't matter if a model looks like it will work based on the way it's formulated, it only matters if it looks like it will work based on its accuracy in making predictions".

So a model for predicting heads or tails that looks like it should work but is only accurate 45% of time isn't as good as flipping a coin, which looks like it shouldn't work but is accurate 50% of the time.

OlegTheBatty wrote:Milton Friedman, the hero of the Chicago School and of libertarians everywhere, is on record as espousing the tenet that it doesn't matter if a model corresponds to reality, it matters if it looks elegant.

...To be important, therefore, a hypothesis must be descriptively false in its assumptions; it takes account of, and accounts for, none of the many other attendant circumstances, since its very success shows them to be irrelevant for the phenomena to be explained.

To put this point less paradoxically, the relevant question to ask about the "assumptions" of a theory is not whether they are descriptively "realistic," for they never are, but whether they are sufficiently good approximations for the purpose in hand. And this question can be answered only by seeing whether the theory works, which means whether it yields sufficiently accurate predictions....

Or, to put it into my own words, "it doesn't matter if a model looks like it will work based on the way it's formulated, it only matters if it looks like it will work based on its accuracy in making predictions".

So a model for predicting heads or tails that looks like it should work but is only accurate 45% of time isn't as good as flipping a coin, which looks like it shouldn't work but is accurate 50% of the time.

Yes, and

"The only relevant test of the validity of a hypothesis is comparison of prediction with experience" — Milton Friedman

He may have been tailoring his position to his audience, or it may reflect a changing opinion over time. I don't know which were earlier and which were later.

. . . with the satisfied air of a man who thinks he has an idea of his own because he has commented on the idea of another . . . - Alexandre Dumas 'The Count of Monte Cristo"

There is no statement so absurd that it has not been uttered by some philosopher. - Cicero

In Australia, every employer has to pay 10% on top of an employee's salary into a superannuation (retirement) fund controlled by the employee. When the employee gets a new job, the employee takes the fund with them. However the employee cannot touch any money in the fund until they turn 65. This means that a large portion of the Australian stock market is individuals investing their superannuation retirement funds.

I know it is my fantasy, but it would be nice if the USA company tax cuts were joined to establishing employee controlled super funds. It would give USA citizens larger retirement funds and increase the percentage of US stock market controlled by "mums and dads" who are less interested in short term complex stock market schemes and more interested in a steady growth of their holdings. It would be good for a stable USA economy.

It's just that you have a population of 320 million and we only have 25 million. We can move faster than you can. We actually steal the best ideas from New Zealand which only has a population of 5 million and can move ahead with social reform faster than both of us.

Matthew Ellard wrote:In Australia, every employer has to pay 10% on top of an employee's salary into a superannuation (retirement) fund controlled by the employee. When the employee gets a new job, the employee takes the fund with them. However the employee cannot touch any money in the fund until they turn 65. This means that a large portion of the Australian stock market is individuals investing their superannuation retirement funds.

This sounds similar to 401(k)s in the United States but it's mandated instead of optional like it is here.

Matthew Ellard wrote:In Australia, every employer has to pay 10% on top of an employee's salary into a superannuation (retirement) fund controlled by the employee. When the employee gets a new job, the employee takes the fund with them. However the employee cannot touch any money in the fund until they turn 65. This means that a large portion of the Australian stock market is individuals investing their superannuation retirement funds.

Austin Harper wrote:This sounds similar to 401(k)s in the United States but it's mandated instead of optional like it is here.

It has some problems

Firstly it doesn't really cover sole traders. Secondly there a scams for pulling out money early for "medical reasons" and this sort of includes cosmetic. Thirdly, some people run their own self managed superannuation funds and they simply start betting on the stock market and lose all their super.

Every system does, so the issue is how many $ should be spent to prevent $ of fraud? Also, in a real sense, the fraud you mentioned only mainly affects the cheater....so, absent some other systematic issue...I would spend NO$ to prevent the behavior.....maybe a few Cents to advertise the risk of it all/actual purpose of the program.

Real Name: bobbo the existential pragmatic evangelical anti-theist and Class Warrior.
Asking: What is the most good for the most people?
Sample Issue: Should the Feds provide all babies with free diapers?

bobbo_the_Pragmatist wrote:Every system does, so the issue is how many $ should be spent to prevent $ of fraud?

Yes. I totally agree. Everything is a trade off.

bobbo_the_Pragmatist wrote:Also, in a real sense, the fraud you mentioned only mainly affects the cheater....so,

One problem is that if the person with the superannuation account blows all their money, then they can simply apply for the normal "over 65" pension, which every Aussie gets which is $1,220 a fortnight for a couple. (USD $976)

I'd be happy I wasn't that guy.........but not knowing your system (that actually sounds very generous) I'm left wondering "So What?" If the superannuation account is blown..... why not the normal pension? Seems to me the worry about fraud is too ambiguous and vague. Somebody spends all their money on medical procedures?==>I don't envy them. What else did you say: OK....they invested in the stock market and lost it all. Again: I don't envy them.....and why "exactly" shouldn't they still get the normal pension? Seems like you got some free floating envy of some kind???

".....♫...Don't Worry, Be Happy....." (you aren't those guys)

Real Name: bobbo the existential pragmatic evangelical anti-theist and Class Warrior.
Asking: What is the most good for the most people?
Sample Issue: Should the Feds provide all babies with free diapers?